Get a group of top advisors in a room for an hour and you have just enough time to get through one question. That’s what happened recently when Denver-based managed account provider Curian Capital invited AdvisorOne to an exclusive roundtable discussion with a sampling of the reps and broker-dealers with which it partners.
Passion to do right by their clients was immediately palpable and each rep had a lot to say. Not surprisingly, current events initially dominated the discussion, but comments soon veered into longer term retirement planning, behavioral economics and retaining client trust after the events of 2008.
Firms that were represented include Commonwealth Financial Network, INVEST Financial Corp., National Planning Corp., Securities America Advisors, Securities Service Network, SII Investments and Walnut Street Securities.
Mike Helgesen, Securities Service Network: The United States government stole my summer. My clients were concerned about the debt ceiling debate, and it was such a huge time suck. It was a waste of time and a waste of productivity.
Marc Anderson, Securities America Advisors (left): Sure, the government stole my summer, but it made my fall. Once the debate was settled and the uncertainty went away, the markets positively responded and my clients could once again concentrate on growing their portfolios.
Mark Singer, Commonwealth Financial Network: But from a financial planning perspective, events like that are always an opportunity to be proactive. If you’re not boilerplate and can tell them specifically how it affects them, they appreciate it.
Scott Campbell, INVEST Financial Corp. (left): What clients are struggling with is fear. They have the loss of equity in their home; they’re concerned about the American dream and whether it can still be achieved. It’s the totality of the information they receive that overwhelms them, and they look to us to be the filter. It used to be all about investment performance, but not anymore.
Rex Rexroad, Commonwealth Financial Network: This might sound a little self-serving, but there’s really no one to turn to like the financial advisor. Guidance and leadership in life typically revolves around money. They might have a priest, accountant and lawyer. But no other professional is at the crux of where those issues meet. No one is at the same level of depth in terms of the client’s situation like a financial advisor.
Campbell: It’s so important to seek out collaborative relationships with CPAs and other professionals if for no other reason than it minimizes the inconsistency of the message the client receives.
Matt Hanshaw, National Planning Corp.: But clients are much more sophisticated than they were even five or 10 years ago. After 2008, there’s a sense of “we’ve been through this before. I know what you’re going to tell me, but I just want to hear it from you.” They still want that reassurance.
Rexroad: And it’s not so much the risk of volatility they’re dealing with; it’s the risk of not reaching their goals.
Scott Holstein, Walnut Street Securities (left): But when clients look at the financial services industry, it’s like financial advisors kind of have the nicest house on a condemned street. They’re not happy with the industry overall, but still trust their advisor. That’s why it’s important not to tear down the competition, because it ultimately hurts us all.
Singer, (left): Managing expectations used to be about a range of return. Now it’s about managing expectations about retirement. Are you 80% to 90% on track for retirement?
Holstein: The good thing is that because of technology and access to information, we're able to provide institutional-level quality to the retail client. But they have disappointment fatigue. They’re wondering how long they’ll have to wait and hang in there for the markets to come back.
Rexroad: That’s why the term “planner” may be old, but it’s coming back.
Helgesen: Managing money is interesting. Managing money in the context of human behavior is infinitely more interesting.
Jim Person, SII Investments (left): The challenge is in an honest evaluation of client needs and matching it with solutions. The concern was always dying too young. Now the concern is living too long. The need for a distribution of 30 years is something that must be carefully communicated or they’ll be too overwhelmed and will shut down.
Singer: Exactly. It’s important not to douse their hopes and dreams.
They can continue in the same lifestyle maybe for 10 years, but then it must be re-evaluated.
Hanshaw: And with the economy struggling, we're seeing a rise in the number of individuals that fall into the Sandwich Generation, those that are 55 to 60 years old that have children moving in while at the same time they have to care for elderly parents.
Holstein: Now it’s about accumulation, distribution and leaving a legacy. How is it all accomplished?
Person: Traditionally, they’ve had confidence in Social Security and a pension. But living longer requires more money, so the 401(k) and
Helgesen (left): Ken Dycthwald was wrong. Almost no one thinks about the “next chapter” of retirement, except in fairy books. They just want to know when they can retire.
Campbell: It used to be retirement happened between age 60 and 65. Now retirement will happen in their 70s.
Person: But we also have the socio-economic changes that have to be dealt with. People are staying longer in their jobs. I worry about people who say "don’t worry about those people who have to work longer." Income disparity is a real problem.
Rexroad (left): There are so many variables, but we have a passion that allows us to see what’s coming down the pike. We’re like pilots that must constantly course correct.
Singer: We once thought that we were great money managers. But performance is generic. We have to manage the client’s unique issues. That is what makes us unique.
Person: But encouraging them to take action is not enough. We are morally responsible to advise clients on the consequences of the actions they take. Just as if we were a doctor or lawyer.